Iron Condor

[MTE]

Despite the volatility ICs have worked well for me over the past 9 months. I did have 3 down months, but I'm still in the positive.

 

[thinkplus]

OC: thanks

MTE: That's very encouraging. What do you trade - index or stocks? How did you manage during those losing months? If you are still in black, you must have managed the losses well. e.g. if you make 3-5% for the other months, and (I agree, not easy to do all the time) but you contain your losses in that range, you might be in a better postion at the end.

do you follow R/S levles or go with set delta or a specific spread limit to manage the risk?

(OC: I know this topic is beaten to death in your journal thread, but couldn't resist to ask here ... -

 

[IV_Trader]

Oh yes…four separate legs , each one with –exp , but put ‘em together and assign a mysterious name such a ICON CONDOR ( yeah baby !)…and voila…we have an income strategy.

 

[Maverick74]

Quote from IV_Trader:

Oh yes…four separate legs , each one with –exp , but put ‘em together and assign a mysterious name such a ICON CONDOR ( yeah baby !)…and voila…we have an income strategy.

Come on IV, I know you took basic math in high school. When you multiply a negative times a negative, you get a positive number. We all know that. If you do it 4 times, you get to start a hedge fund!

 

[IV_Trader]

Quote from Maverick74:

Come on IV, I know you took basic math in high school. When you multiply a negative times a negative, you get a positive number. We all know that. If you do it 4 times, you get to start a hedge fund!

my bad...I was ADDING them all this time !

 

[Tums]

Quote from TradingPilot:
An Iron condor seems to good to be true. I am always very skeptic of strategies that just seem like easy money.
Anyone here use the strategy often?
Go easy on me guys im a n00b.

if you can read these graphs, then condor is easy money for you.

<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1153749">

<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1153753">

 

[newguy05]

tums, that's a lovely chart. What platform are you using to generate this.

 

[tropicaltrader]

Quote from optioncoach:

Iron Condors work great in low vol environments until it changes. This is the paradox most people overlook. It is not a high vol environment where they do well, it is low vols.

I abandoned ICs after AUG when vols were no longer low relatively. I did not blow out since I kept them to a limited % of my account nor did I blow out years of profits but I still had to take a loss and get out.

They work well when IV is declining or steady, or increases only slightly. Whether IV is high or low is irrelevant. They can do quite well in a high vol environment. If you wrote IC's in March when VIX was 26, you would have profited very handsomely. You have to adjust the width to account for higher IV.

If you're blowing out when IV increases a few percentage points or the spot moves 5% against you, you're too aggressive.

 

[gkishot]

Quote from tropicaltrader:

They work well when IV is declining or steady, or increases only slightly. Whether IV is high or low is irrelevant. They can do quite well in a high vol environment. If you wrote IC's in March when VIX was 26, you would have profited very handsomely. You have to adjust the width to account for higher IV.

If you're blowing out when IV increases a few percentage points or the spot moves 5% against you, you're too aggressive.

Is there any way to predict whether IV will remain steady or will rise sharply in the coming month? Isn't it what the charts above are doing?
How much would 'increases slightly' be in terms of the percentage?

 

[Tums]

Quote from newguy05:

tums, that's a lovely chart. What platform are you using to generate this.

that's from Optionetics Platinum.